AccountingWEB Weekly News Wrap-Up - Issue 152

AccountingWEB Weekly News Wrap-Up - Issue 152

June 28, 2002

This News Wrap-Up Sponsored By:

TADOnline Web Based Communication Management System

NEWS FOR ACCOUNTINGWEB SUBSCRIBERS

  1. Andersen Embroiled in $4 Billion WorldCom Accounting Fraud
  2. WorldCom Paves The Way For Fast Action Audit Reforms
  3. Andersen Staffers to Find New Home at KPMG Consulting
  4. Treasury Announces Moratorium on Stock Option Withholding
  5. Audit Reform Plans May Leave GASB Out in The Cold
  6. BDO Seidman Nears End of Case Involving Criminal Charges
  7. RS Gearing up For 2001 Random Audits
  8. Andersen Asks Judge Harmon For Acquittal or Retrial
  9. IRS Rules in Favor of Consumer-Driven Health Plans
  10. New Ruling Regarding Gain, Loss on Short Sales of Stock

EDITORIAL

Here we go again. Just a few days ago, pundits were suggesting that Wall Street had bottomed out and that an upturn was in the works. Progress was being made on audit reforms with the intent to restore investor confidence. America was almost ready to make light of corporate misdoings with Playboy's "Women of Enron" issue scheduled to hit the stands. But the bombshell revelation this week that accounting activity at telecom giant WorldCom amounts to the largest accounting fraud to date, coupled with the public pronouncements that auditor Arthur Andersen "missed" $4 billion in basic Accounting 101 misdeeds, has landed another bruising blow to corporate America and to an already battered accounting profession.

As American business begins to get up off the mat, investors are no longer asking, "Can it happen again?" They are asking instead "Who will be next, and how many will there be after that?" And we all want to know one thing - is there anyone out there we can believe? At least we've always had the comfort of knowing "In God We Trust." Oh yeah, I forgot, a California court ruled God unconstitutional this week too...

Michael Platt, CEO

Our Mission: "To inform, to enrich, to enlighten, to entertain."

NEWS FOR ACCOUNTINGWEB SUBSCRIBERS

1. Andersen Embroiled in $4 Billion WorldCom Accounting Fraud

Four billion dollars in expenses was allegedly fraudulently misrepresented on WorldCom's financial statements in the latest revelation to shock the accounting profession. Andersen now finds itself in the unenviable position of being involved in what may be the two largest corporate bankruptcies in American history.

2. WorldCom Paves The Way For Fast Action Audit Reforms

"Outrageous." "Scandalous." "People will be held accountable." Anger, outrage and a feeling that "enough is enough" is prompting lawmakers in Washington to fast-track accounting reforms in light of the WorldCom revelations this week.

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3. Andersen Staffers to Find New Home at KPMG Consulting

KPMG Consulting is one step closer to solidifying its plans to acquire independent Andersen practices around the world with its agreement this week to pick up the U.S. arm of Andersen Consulting.

4. Treasury Announces Moratorium on Stock Option Withholding

The Treasury Department has bowed to pressure from Congress and industry specialists and backed off its stated intentions to collect withholding taxes on Incentive Stock Options and Employee Stock Purchase Plans.

5. Audit Reform Plans May Leave GASB Out in The Cold

Significant attention is being spent on creating a new funding mechanism for the Financial Accounting Standards Board to ensure the integrity of a new auditor independence system. What will happen to the Government Accounting Standards Board - the sister organization responsible for standard setting? Audit reform proposals have some insiders worried.

6. BDO Seidman Nears End of Case Involving Criminal Charges

Lurking in the shadows behind the public spotlight on Andersen and Enron has been a criminal case against BDO Seidman for failing to report that a client had misappropriated investor funds. Legal steps this week follow a settlement in April with a goal of removing all criminal charges against the firm.

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7. IRS Gearing up For 2001 Random Audits

50,000 tax returns will soon get the once-over by the IRS, with the intent of seeking out trends to assist the IRS in collection efforts. Over 2,000 taxpayers will be singled out for a line-by-line detailed audit in a random audit process that is being revived after a fourteen year hiatus.

8. Andersen Asks Judge Harmon For Acquittal or Retrial

Andersen isn't buying the idea that they were found guilty of obstruction of justice in the recent Enron-related trial. "In the interest of justice" they have filed a motion for acquittal or a complete retrial.

9. IRS Rules in Favor of Consumer-Driven Health Plans

In a decision that could change the benefit landscape of the nation's workplaces, the Internal Revenue Service ruled this week that employers who participate in high-deductible health care insurance policies may create Health Reimbursement Arrangements (HRAs) with rollover rights for their employees. What are HRA's and how will they help?

10. New Ruling Regarding Gain, Loss on Short Sales of Stock

If you or your clients have been involved in short selling of stock, pay attention. The IRS has released a new Revenue Ruling detailing the exact ways that gains or losses are to be realized.

HOT TOPICS!

Be sure that you haven't missed any of AccountingWEB's most read stories of the past two weeks:

1. Andersen Found Guilty

2. Auditing Standards Board Issues SAS95, Critics Want More

3. Tips to Help You Become a Better Networker

4. GAO Releases Report on The Accounting Profession

5. Beware of Doctored Financial Statements

6. Andersen to Cease Auditing Publicly-Held Companies

7. IRS Scrutinizes Rapid Climb in Tax-Book Differences

8. Selective Selling: When Times Are Tough, Make Your Standards Tougher

9. New California Rule Regarding Travel Time Compensation For Non-Exempt Employees

10. Jury is Deadlocked in Andersen Trial

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